Tuesday, May 31, 2011
Monday, May 30, 2011
MIT Macro Panel: Duflo
Esther Duflo, a renowned MIT economics who works on development, also presented at the Macroeconomics Panel. Her main point was that asking big general questions such as "does aid work" is pointless because there is no way to empirically prove one way or another. Instead, she asks "what individual aid programs work?" She mentioned Avinash Dixit, who is another MIT economist who specializes more in econometrics, who seems to have influenced her a great deal. He had coined "MIT style theory" which seems to be modeling by example.
She had an interesting example of mosquito net use in Africa (I think Kenya). The question was whether to give away mosquito nets for free or to charge for them. Many were concerned that because of the "sunk cost fallacy" if people paid for them, they were more likely to use them as intended rather than as fishing nets or other uses. Also, if they got nets for free, they may be less likely to pay for nets in the future. However, the research showed that participation in using nets were much better when they were free, and furthermore that people were more likely to buy them in the future if they got the first one for free.
She had an interesting example of mosquito net use in Africa (I think Kenya). The question was whether to give away mosquito nets for free or to charge for them. Many were concerned that because of the "sunk cost fallacy" if people paid for them, they were more likely to use them as intended rather than as fishing nets or other uses. Also, if they got nets for free, they may be less likely to pay for nets in the future. However, the research showed that participation in using nets were much better when they were free, and furthermore that people were more likely to buy them in the future if they got the first one for free.
MIT Macro Panel: Conservatism in the Field
Robert Solow is one of the legends of the field, and he spoke at the Macroeconomics Panel at the MIT 150 Economics Symposium I posted about last week. He talked about the Keynesian foundations that were dominant in 1950-1970. Their development was originally based on observing empirical events. Then, in the 1970's with the oil shocks, macro lost a lot of credibility, and conservative ideology gained a strong foothold in the field. Also, there was a stronger motivation to move away from event-driven analysis and towards theoretical (mathematical) neatness.
It seems that conservatism and theoretical neatness still dominates the field today, although I wonder if the time is ripe for another shift. Even if it is, in practice, it seems that macroeconomists really only have two tools at their disposal, which is setting the interest rate and recommend fiscal policy. Even then, the only one economists have direct control over is setting the interest rate.
It is possible there are other tools that can be developed. There was a discussion on the panel about future research in macroeconomics. Better understanding the components of total factor productivity was one of them. There are two approaches which are to endogenize human capital or technological development (or both). Understanding how to model technological growth would be important for developing responsible environmental economies. However, there are also more direct ways to do that, such as researching the effectiveness of policies that promote environmental technological development.
It seems that conservatism and theoretical neatness still dominates the field today, although I wonder if the time is ripe for another shift. Even if it is, in practice, it seems that macroeconomists really only have two tools at their disposal, which is setting the interest rate and recommend fiscal policy. Even then, the only one economists have direct control over is setting the interest rate.
It is possible there are other tools that can be developed. There was a discussion on the panel about future research in macroeconomics. Better understanding the components of total factor productivity was one of them. There are two approaches which are to endogenize human capital or technological development (or both). Understanding how to model technological growth would be important for developing responsible environmental economies. However, there are also more direct ways to do that, such as researching the effectiveness of policies that promote environmental technological development.
Financial Innovation
Now I'm watching the Financial Innovation panel from the MIT 150 Economics symposium.
Doctors Lean Left
Since fewer doctors are owning their own practices, they are becoming more interested in patient care than low taxes and malpractice insurance. They are becoming less conservative as a group according to an NYT article.
Friday, May 27, 2011
MIT Macroeconomics Symposium
I'm watching this video from the MIT 150 Economics Symposium back in January about the development of macroeconomics. It helps to watch it several times as I learn more about macroeconomics from reading and talking to friends who are economists. I get a little bit more out of it each time. I'm looking for guidance and inspiration for possible research topics or other projects.
Tuesday, May 24, 2011
没有人想当工程师
今天我看见有一篇文章解释为什么有很多美国大学生不要做工程师。搂住说是应为工程学校太严格，不给学生补课，学生更不上就拉倒。可是在美国，唯一的原因大概就是做医生，律师，经纪人，和生意挣的钱多，人家也比较尊敬你。
Trustmark for Boosting Wind Power
There was an interesting article in Fast Company about Vestas, which is promoting a trustmark, WindMade.
In order for consumers to account for the externalities of business such as environmental damage, more information is needed about products other than just quality and price. That is why certifications such as Energy Star, USDA Organic, and Fair Trade will be increasingly important for helping consumers make decisions about products and business models. How can this be implemented? Third party certification and reviews may become a bigger industry. On the other hand, this might be expensive for the consumer as well as small businesses. It would be an additional barrier to entry for a startup, which is not necessarily something we'd want. It would be desirable to achieve greater transparency without the extra cost.
In order for consumers to account for the externalities of business such as environmental damage, more information is needed about products other than just quality and price. That is why certifications such as Energy Star, USDA Organic, and Fair Trade will be increasingly important for helping consumers make decisions about products and business models. How can this be implemented? Third party certification and reviews may become a bigger industry. On the other hand, this might be expensive for the consumer as well as small businesses. It would be an additional barrier to entry for a startup, which is not necessarily something we'd want. It would be desirable to achieve greater transparency without the extra cost.
Adaptation in Chicago
Chicago city planners are already making preparations for a different climate because of global warming.
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